Market Analysis: Weekly roundup till Oct 24

Both the indices reacted downward by nearly 3 per cent during the week under review, led by steep fall in Reliance Industries and capital out flows by FII.

The BSE Sensex lost 515 points against previous week"s close, and closed at 16810. The Nifty lost by 144 points and closed at 4997 from its previous weekends close.

Markets resumed on a stronger note after cabinet"s decision to offload 5 per cent stake in NTPC and 10 per cent in unlisted firm Satluj Jal Vidyut Nigam.

FII"s pumped Rs.1770 crore on Oct 20, and pulled out over Rs1160 crore in the next three sessions.

During the week BSE Midcap index lost 2.1 per cent, while Small cap index 1.3 per cent.

BSE IT and the FMCG indices were the top gainers by 3.2 per cent and 1.5 per cent respectively. Week"s top losers were BSE Oil & Gas and Consumer Goods indices by 6.4 per cent and 5.7 per cent.

Going Forward The factors that will set the direction for the markets this week are, review of monetary policy and unveiling its outlook on interest rates, inflation and economic growth.

Investors will keenly watch Q2 results, which are expected to announce in this week by a few companies like Reliance Industries, Tata Motors and Wipro etc.

Corporate

Tata Motors increase stake to 100pc in Spanish bus firmTata Motors has bought the remaining stake of 79 per cent in Hispano Carrocera SA, Spain"s largest bus and coach bodies" manufacturers for an undisclosed sum.

Tata Motors had paid Rs 70 crore in 2005 for buying a 21 per cent stake in the Spanish company. Tata motors increased its stake in Hispano, mainly to reinforce itself as one of the World"s largest bus maker.

After the acquisition, the company will further strengthen the ongoing initiatives to improve operational efficiencies.

The target company has commercial relations with 50 countries and capacity to make almost 2000 units every year.

Renault-Mahindra divorceRenault is looking for an India partner to replace the Mahindra & Mahindra in Mahindra-Renault-Nissan Joint venture, which sells the Logan mid-sized car.

Both the partners have differences on Logan"s poor performance in the Indian market.

Renault-Nissan has also alliances with Bajaj Auto for developing an ultra low-cost car and with Ashok Leyland for light commercial vehicles.

The company has recently rolled out its DTH services and it targets 2 million subscribers by offering different services within a year.

It is expected that, annual spending could be around Rs.1000 crore for this purpose.

Industry estimates suggest that, there are 45 to 50 million homes in India that currently own a DVD player. The size of the business is estimated to be around Rs.900 crore.

Economy

EAC pegs growth at 6.5pc but stimulus to remainAccording to the Prime Minister"s Economic Advisory Council (EAC) the Indian economy is expected to grow at 6.5 per cent in the current fiscal.

The improvement in growth of the economy is expected on account of robust Industrial growth in the second half of the current fiscal.

According to EAC, there is no immediate hike in interest rate or change in fiscal policy stance.

Government may divest stake in Hind CopperGovernment is considering divesting its stake in copper producer Hindustan Copper. The board of Hindustan Copper is considering the proposal, and it will come out with the proposal in next 2 to 3 months.

According to the Company sources, the company may issue fresh equity along with the government stake sale. Part of the proceedings is expected to use for expansion of the business.

The company has a capex plan of Rs. 45 crore in the current fiscal.

SBI raised 750 million dollars via medium-term notesSBI raised around Rs 3500 crore in the overseas market through five year bonds as a part of medium term note programme (MTN).

The five year MTN issue was rated BBB- by Fitch. The money may help SBI in its effort to boost overseas presence; which is planning to set up 40 branches in overseas.